Chapter 34 The Process of Supply
The financial year runs from 1 July to the following 30 June. Supply – the appropriation or authorisation by Parliament of the sums of money required to carry on the government of the country – is made in respect of that year. Some of this supply is in place permanently under permanent legislative authority but the greater part needs to be authorised on an annual basis under the House’s supply procedures. The process of granting supply involves the House taking action before, during and after the financial year to which the appropriations relate. So in any financial year the House is dealing with residual supply issues relating to the previous financial year, supply issues relating to the current financial year and preparatory supply issues relating to the forthcoming financial year.
Outline of the supply process
In outline, the supply process involves: consideration of the Government’s budget strategy for the coming year, an interim supply authority being given before the financial year opens, presentation, examination and approval of the Government’s Budget and main estimates of expenditure, further temporary supply authorities being granted, approval of any supplementary estimates presented by the Government and, after the year ends, confirmation or validation of any unappropriated expenses or capital expenditure that were incurred.
The timetable for these processes as they relate to a particular financial year is—
Prior to the financial year commencing
||Government’s Budget preparations begin
Economic and fiscal update published (contains forecasts on which Budget decisions will be based)
Budget policy statement presented (sets out Government’s Budget strategy)
Budget and estimates presented (Government’s main economic and fiscal policy proposals)
supply approved (interim spending authority to apply from 1 July)
During the financial year
July–SeptemberBudget and estimates approved. Further imprest supply approved.
May–JuneSupplementary estimates presented and approved (additions and variations to the main estimates approvals)
After the financial year ends
February-MarchExcess expenditure or other expenditure not approved in the estimates or supplementary estimates, confirmed or validated.
(This is the standard time-frame for the process of supply but it is always liable to disruption by a dissolution of Parliament.)
Consequently, parliamentary consideration and authorisation of the supply required for each financial year commences before that financial year opens and does not conclude until well after that financial year has ended – occupying a period of some 18 months or more. This chapter examines the procedures employed to discharge these tasks. The House’s confirmation or validation of excess expenditure or other unappropriated expenditure is integrated with the procedures under which the Crown and departments report to the House on their financial and operational performance. (See Chapters 35 and 36, where this aspect is dealt with in detail.)
The Budget is the collective name for a compendium of economic and fiscal measures announced annually by the Minister of Finance. It is a process rather than an event, involving the making of decisions, the preparation of documentation relating to those decisions and their release on “Budget day”. Insofar as one event does signify the Budget, it is the Budget statement delivered to the House by the Minister in moving the second reading of the main Appropriation Bill
in which the main components of the Budget will be described.
The preparation of a Budget prior to its presentation to the House is almost exclusively a matter for the executive rather than the legislature. Rarely has the House itself been actively involved in making public expenditure decisions as part of Budget planning, as opposed to endorsing Budget proposals.
There are few statutory or Standing Orders obligations impinging on the process that Governments must follow in deciding what proposals are to be included in a Budget and in the executive’s proposals for public expenditure that it presents to the legislature. Only in respect of the offices of Parliament is the House involved in devising estimates of expenditure itself. Statute provides some obligations relating to the conveying of a Government’s intentions to the House (such as in the Budget policy statement) but the process followed in preparing a Budget is largely an internal matter for the Government to determine. Thus it is recorded that as late as the first Labour Government in 1935 it was rare for the Treasury even to report on Ministers’ spending proposals, which were usually put before the Cabinet informally and on an ad hoc basis.
The arrangements followed by modern governments have tended to be increasingly sophisticated and take account of the overall economic and fiscal implications of individual spending proposals. The outline that follows represents that recently employed, linked in with the few extant statutory or House procedural requirements.
Formal preparations for a Budget begin as early as August in the preceding year when Ministers start to consider what the Budget strategy objectives will be. For this purpose, planning proceeds on objectives for the next three years. The Cabinet ultimately determines (usually by November) the relative importance of the outcomes that the Government wishes to achieve and agrees on what is to be included in the next Budget.
Half-year economic and fiscal update
An economic and fiscal update must be published in the November–December period (except where a pre-election update has been published in the last three months of the year). This update contains economic and fiscal forecasts for the current and the next two financial years.
This information is critical to the preparation of the Budget. The update stands referred to the Finance and Expenditure Committee
, though the committee is not obliged to report on it.
Budget policy statement
Decisions taken during the strategic phase are embodied in a Budget policy statement which the Minister of Finance must issue by 31 March each financial year if Parliament is in session (which, unless an election is called at that time, it almost invariably will be). This means that, if the statement is ready, it can be released at the same time as the publication of the half-yearly economic and fiscal update. The Budget policy statement specifies the overarching policy goals that will guide the Government’s Budget decisions, the policy areas the Government will focus on, and how the Budget will accord with the short-term intentions referred to in the most recent fiscal strategy report.
The Budget policy statement stands referred to the Finance and Expenditure Committee.
The committee must report to the House on it within 40 working days of its presentation to the House.
The Minister of Finance, if requested, is expected to attend the committee for the purposes of its examination of the statement.
It is the invariable practice for this examination to be recorded and transcribed.
The first general debate held after the committee’s report on the statement has been presented is devoted to considering the statement and the report. The chairperson of the Finance and Expenditure Committee (or, in the chairperson’s absence, some other member of the committee) begins the debate.
There may be 12 speeches of up to 10 minutes each
in contrast to the usual one-hour general debate. But the debate is not a full Budget debate. Members must speak relevantly to the statement and the committee’s report on it.
The objective of issuing a Budget policy statement (which has been a statutory obligation since 1994) is to make more transparent the bases on which Governments make their Budget decisions. This objective is undermined when new initiatives with significant fiscal impacts are introduced late in the financial year, by way of the supplementary estimates. This can happen, for example, where the Government changes after a Budget has been delivered.
Statements of intent
Each year departments must prepare information on their future operating intentions – known as statements of intent.
Statements of intent are presented to the House at the time of the Budget.
They are intended to provide information on the nature and scope of the department’s functions and on what the department will be attempting to achieve over the next three years, explicitly linking the services which the department is providing for the Government (what the department does) with what the Government wishes to accomplish (its policy goals). Statements of intent are expected to identify the challenges the department faces in carrying on its business, both in terms of external factors, such as the international, national and sectoral outlook, and internal factors, such as its capability in terms of staff and other resources. The statements are also expected to explain how progress towards its achievements can be measured. While they are departmental documents they are developed with the Minister in charge of the department and must include any matters that the Minister wishes to include as a means to understanding the department and its operations.
In respect of the immediate financial year, statements of intent must also set out detailed financial information on the department containing properly prepared forecast financial statements and statements of forecast service performance.
The department will be expected to report against these financial statements at the end of the year when they will be formally audited.
In the case of offices of Parliament there is a process of consultation with the House that must be followed in preparing each office’s statement of intent. Before the start of each financial year each office must submit to the Speaker draft information about its future operating intentions.
This information is considered by the Officers of Parliament Committee, which may communicate its views directly to the office concerned.
Each office must then have regard to any such comments in preparing its final statement of intent.
Crown entities and State enterprises are also obliged to prepare and publish statements of intent. (See Chapter 35.)
Preparation of the estimates
Priorities identified in the Budget strategy guide Ministers and departments in the preparation of submissions for matters to be included in the Budget. This involves preparing draft departmental budgets for the next three years complemented by output plans for the coming year. The output plans specify proposed departmental outputs, performance indicators in respect of those outputs and the expected costs of producing them.
Ministers and departments also prepare submissions on new policy initiatives that they wish to see included in the Budget and which will have an impact on revenue and expense levels. These policy proposals are considered by the Cabinet for consistency with the Government’s overall strategy, particularly as set out in the Budget policy statement.
As part of the estimates preparation too, the levels of expenses on existing outputs and activities funded from each vote are updated. These levels (called baselines) are agreed for the current and the next two years on a rolling basis, giving the Government and departments some assurance about the expenditure levels they will enjoy over a three-year period. The baseline levels can be changed if Cabinet approves, though this will be done only in defined circumstances – such as, for example, if forecasts suggest that demand-driven expenditure is likely to change significantly. Failure to carry out a baseline update of a vote before preparing the estimates increases the likelihood that alterations to that vote will need to be made later in the financial year through supplementary estimates. In these circumstances the main estimates are less reliable as an indication of likely expenditure. This is considered an unsatisfactory basis on which to present estimates to the House.
The decisions made as a result of these activities are consolidated into the estimates and other information to be presented to the House at the time of the Budget.
Format of the estimates
The form in which the estimates are prepared results partly from the information that statute requires to be included in it. But, subject to this, its format is largely in the hands of the Minister of Finance as the Minister who is responsible for its preparation and presentation to the House.
It has been the practice for the Treasury to discuss significant changes to the format of the estimates with the Finance and Expenditure Committee in advance of their adoption. (See Chapter 31.) There is now also a statutory duty of consultation with the House over changes to the format of the estimates (including supplementary estimates) and the other supporting information that must accompany each Appropriation Bill. The Minister must submit any proposed change to the Speaker, who presents it to the House.
The proposal is referred to the Finance and Expenditure Committee which disseminates it to the other subject select committees and co-ordinates their responses. The Finance and Expenditure Committee then communicates its own views on the proposal and those of the other committees directly to the Minister.
The Minister, in finalising any changes to the format of the estimates, must take into account any comments made by the Speaker and the select committees.
Funding for offices of Parliament
The offices of Parliament are subject to a special process for the pre-budget approval of appropriations for their offices. This involves a parliamentary committee fixing their budgets before their estimates are formally presented to the House.
The officers of Parliament must submit to the House each year an estimate of expenses and capital expenditure to be incurred by their offices, together with a description of the classes of outputs to be produced, the revenue to be earned and other financial information.
In the case of the Auditor-General this information is incorporated in that officer’s draft annual plan prepared for submission to the House.
The information is forwarded directly to the Officers of Parliament Committee. It is the committee’s duty to recommend to the House an estimate of the expenditure of each office of Parliament for inclusion in a vote in an Appropriation Bill.
For this purpose the committee hears evidence from the officers themselves and calls for comment from officials of the Treasury. In determining what estimates to recommend, the committee is mindful of the criteria used by the Cabinet in considering departmental budget submissions.
Once it has made its decisions the committee reports to the House.
The House, in turn, recommends to the Governor-General, by way of an address, the estimates that are to be included for the offices of Parliament in the Appropriation Bill to be presented to the House for that year.
The House is not bound to follow the Officers of Parliament Committee’s recommendations in making its recommendations for inclusion in the Appropriation Bill, though it invariably does so. Similarly, the Crown is not legally bound to include the recommended amounts in the Appropriation Bill, although it is an established convention that it will do so since Ministers have been a party to the address from the House recommending those amounts in the first place. On one occasion when the amount for an office of Parliament included in an Appropriation Bill differed from that recommended by the House, the Officers of Parliament Committee drew the discrepancy to the attention of the Prime Minister and the Minister of Finance, expressing its concern at the variation. The Ministers assured the committee that this had occurred as the result of an administrative error and that there was no intention to infringe the rights of the House.
Any alteration during the course of the financial year to the estimates so approved is subject to a similar procedure of recommendation by the Officers of Parliament Committee
and commendation by the House to the Governor-General by way of address.
Such altered estimates are included in the Appropriation Bill containing the supplementary estimates of expenditure.
The appropriations for outputs supplied by the offices of Parliament are included in separate votes administered by those offices. The Speaker rather than a Minister is responsible for these votes.
Each vote is examined by a subject select committee as part of the estimates examination in the same way as any other vote.
A constitutional convention of Budget secrecy has been acknowledged to exist protecting information from being required to be disclosured during the preparation phase of the coming Budget. The three-year cycle for expenditure projections may extend this convention of secrecy over an even longer period.
Certainly, premature disclosure of the Budget has important political implications, though it is not a question of privilege.
A British Chancellor of the Exchequer resigned after he personally disclosed the contents of the Budget to a journalist before delivering the Budget statement in the House.
In New Zealand the premature release of copies of the 1986 Budget (an error which the Minister had not made personally) led the Minister to offer his resignation. This was not accepted.
In 1977, allegations that Budget decisions had been disclosed to journalists before their presentation to the House resulted in a select committee inquiry being held. The committee could not identify if a leak had occurred.
An individual department’s forecast report has been inadvertently released before the Budget, drawing strong criticism from the select committee examining the relevant vote.
Although secrecy is accepted as applying to the preparation of a Budget, an assessment of any request for Budget information still has to be made as to whether disclosure of that information would prejudice the Budget’s effective preparation and whether there are any countervailing public interest considerations favouring disclosure.
In general, however, the strong constitutional practice of Budget decisions being announced first in the House (subject to an embargoed Budget briefing or “lock-up” earlier that day) supports the constitutional convention that Budget decisions and information closely associated with those decisions are protected from disclosure until then.
First Imprest Supply Bill
To start spending money or incurring expenses or capital expenditure in a new financial year, the Government must, before the year opens, obtain express parliamentary approval in the form of legislation. The Government’s final demands for supply for the new financial year will not have been approved by the House by this time and, indeed, may not yet have been framed. Consequently, the Government asks for a general interim authority to spend public money and to incur expenses and capital expenditure. The request for interim authority is included in an Imprest Supply Bill.
The moneys to be spent and the expenses and capital expenditure to be incurred under the authority of an Imprest Supply Act are charged in the manner subsequently specified in the estimates which will show how the total financial authorities voted to the Government (including those under imprest supply) are to be used. In the meantime the expenses and capital expenditure are charged as if such an Act had been passed.
The Imprest Supply Act gives the Government financial authority for the new financial year. How long this authority lasts depends upon the amount the House grants, the rate at which the Government uses it, and the time it takes the House to pass an Appropriation Act making appropriations for the year. The first Appropriation Act for the year is passed within three months of the delivery of the Budget.
Therefore the first Imprest Supply Bill is designed to give at least sufficient supply from 1 July (the opening of the financial year) to the end of this period.
Introduction and passing
An Imprest Supply Bill is subject to specially prescribed procedures for its introduction and passing that differ from other Government bills.
In the first place, it may be introduced at any time during a sitting except during the course of a debate.
Secondly, an Imprest Supply Bill is usually, but does not have to be, taken through all its stages at one sitting. The Standing Orders provide that this may happen and urgency is not necessary to permit it.
But a sitting is not automatically extended for the passing of an Imprest Supply Bill, so if there is not enough time remaining in the sitting day to pass the bill (three hours), it is necessary to take urgency so that the sitting can be extended, otherwise passage of the bill will be interrupted and resumed on a future day. Whether urgency is taken or not, an Imprest Supply Bill does not stand referred to a select committee.
Following the bill’s introduction, it is read a first time without any amendment or debate.
The Minister in charge of the bill (who may be, but is not necessarily, the Minister of Finance) then moves the second reading. As is the case with the Address in Reply and Budget debates, in practice there are virtually no limitations to this debate on the grounds of relevancy. The question for the second reading is open to amendment in the same way as other public bills and also to a “public affairs” amendment, by means of which a question of confidence in the Government can be raised.
Each member may speak for up to 10 minutes on the second reading or on any amendment to that question, and the total debate is limited to three hours.
The subsequent proceedings on the bill are then telescoped in a manner unique to it. The House does not resolve itself into committee except in the unlikely event that the Minister in charge of the bill wishes to propose amendments to it.
If this is the case, the House resolves itself into a committee of the whole House automatically. Where a committee stage is held, only the Minister’s amendments (and any relevant amendments to them) are considered. When amendments to a part or schedule have been disposed of, the question is put that that part or schedule as amended stand part.
It is extremely rare for an Imprest Supply Bill to be amended. In the normal course, the House passes over the committee stage altogether and proceeds to the third reading, the question on which is put without any amendment or debate.
The debate on the second reading of an Imprest Supply Bill may be taken together with the second reading of the Appropriation Bill dealing with the supplementary estimates.
In practice, this enables the first Imprest Supply Bill for the new financial year to be debated along with the supplementary estimates for the current year as both bills need to be dealt with by 30 June.
The Budget statement is the Minister of Finance’s speech in moving the second reading of the main Appropriation Bill.
The Budget statement has, since 1996, been delivered at 2 pm on a Thursday. (It was formerly delivered at 7.30 pm after the financial markets had closed.) It is regarded as the principal parliamentary occasion of each year. The time for delivery of the statement is prescribed in the Standing Orders.
The Budget must, by law, be delivered within one month of the opening of the financial year – that is, by 31 July – unless the House specifically resolves to the contrary.
In fact the Budget has tended to be introduced much earlier than this statutory deadline, indeed normally it is introduced before the financial year to which it relates has opened. Since the commencement of the financial year was shifted from 1 April to 1 July in 1989, the earliest Budget was delivered on 14 May in 1998 and the latest on 27 July in 1989. Governments tend to aim to present their Budgets to the House during the course of May.
The main Appropriation Bill
The main or first Appropriation Bill of each financial year contains the Government’s comprehensive annual appropriation proposals. As with any Appropriation Bill special procedures apply to its passing.
In particular, its second reading debate gives rise to the Budget debate and its committee stage gives rise to the Estimates debate.
The main Appropriation Bill is introduced on a Thursday after the announcement of the presentation of any petitions, papers and select committee reports and of the introduction of any other bills. The day of the Budget and thus of the introduction of the main Appropriation Bill must be notified in advance to the House by the Government.
This is usually done by means of the Leader of the House’s weekly business statement, though it is likely that the Leader will have previously advised the Business Committee.
The bill’s introduction is announced by the Clerk and then the Minister moves that it be read a first time. There is no amendment or debate on this question.
At this point the Minister traditionally gives copies of the Budget statement to the Speaker, the Prime Minister, the Leader of the Opposition, other party leaders, the Clerk and the Hansard staff seated in the Chamber. Only one copy of the statement is given to each recipient.
The House proceeds immediately to the second reading of the bill.
The Minister moves the second reading of the Appropriation Bill and in speaking to that motion delivers the Budget statement.
This is not like any other second reading speech. It is the delivery of a prepared statement. Consequently, there are strong conventions against interjections because it is impossible for the Minister to reply to them. Similar courtesies of restraint are expected to be accorded the leaders of other parties who speak immediately following the Minister.
In the speech the Minister reviews the international economic outlook, the performance of the New Zealand economy and the effectiveness of the Government’s policies over the past year, and outlines the Government’s proposed economic and fiscal measures to deal with the assessed situation of the country. The Budget, therefore, contains a number of announcements of economic and fiscal policy. But it may also contain announcements falling into the category of social policy changes. Among the more dramatic of Budget announcements are tax changes and, on one occasion, the revaluation of the currency
, though there are few announcements of this nature in modern Budgets. Many of the measures proposed to be taken may be announced only in outline in the Budget statement. Further details of the proposed changes are then given in statements released by the responsible Ministers shortly after the statement has been delivered, and in due course legislation may need to be introduced to give effect to them. The Budget is concerned with much more than the expenditure proposals contained in the estimates and embodied in the main Appropriation Bill; it is concerned with the whole range of the Government’s financial, economic and social policies.
In delivering the Budget statement the Minister is unrestricted as to the length of the speech.
A Budget occasionally has a sobriquet applied to it by which it subsequently becomes known – as with ‘black Budget’ (1958) and ‘mother of all Budgets’ (1991).
On concluding the Budget statement the Minister presents to the House a copy of the statement, the annual estimates and other supporting information,
the departmental statements of intent,
a fiscal strategy report,
and an economic and fiscal update.
The Minister then moves that these documents be published. There is no debate or amendment on such a question.
The departmental statements of intent provide information on each department’s future operating intentions for the next three financial years.
The fiscal strategy report states the Government’s long-term objectives for fiscal policy. It must explain how those long-term objectives accord with the principles of responsible fiscal management. If the Government intends to pay less than the required annual capital contribution to the New Zealand Superannuation Fund, it must state this and the reasons for doing so in this report.
The economic and fiscal update makes economic and fiscal forecasts for the financial year to which the Appropriation Bill relates and the two following years. It must include the annual capital contributions that are to be made to the New Zealand Superannuation Fund in those years.
Statements of intent are used by select committees in the examination of the Estimates. The fiscal strategy report and the economic and fiscal update stand referred to the Finance and Expenditure Committee,
which must report on them to the House within two months of the delivery of the Budget.
The Finance and Expenditure Committee’s practice is to examine the Minister on the fiscal documents and to combine this examination with its consideration of the vote relating to the Treasury. In this way it considers the economic and fiscal outlook together with the economic advice provided by the Treasury during the financial year and reports to the House accordingly.
These documents and reports are available for debate on the third reading of the Appropriation Bill.
The Budget debate
The Budget debate opens following the presentation of the Budget papers with the Leader of the Opposition or the official Opposition’s finance spokesperson speaking in response to the statement. Party leaders, in order of party size, are entitled to be called to speak first in the debate so the Leader of the Opposition is followed by the Prime Minister and other party leaders.
Party leaders of parties with six or more members are entitled to speak for up to 20 minutes. All other members are limited to 10 minutes.
Thus where the Opposition’s finance spokesperson speaks first in the debate he or she is limited to a 10-minute call and the Leader of the Opposition takes the 20-minute call later in the debate. The debate takes precedence over all other Government orders of the day until it is completed.
While the debate must appear as the first Government order of the day on the order paper, this does not prevent it being adjourned after it is reached and other business transacted.
The total time allowed for the debate, excluding the Budget statement itself, is 14 hours.
This means that the debate ought to conclude by the end of the week following the delivery of the Budget if it is not otherwise adjourned. No Wednesday general debate is held while the Budget debate is in progress.
As is the case with an Imprest Supply Bill, an amendment relating to public affairs may be moved on the question for the second reading of the main Appropriation Bill.
This gives the opposition parties an opportunity to move a widely framed amendment attacking the Government’s policies. It also gives an opportunity for an express “no-confidence” motion to be moved. An amendment relating to public affairs does not need to be strictly relevant to the motion for the second reading of the bill. As relevancy is not a consideration on this type of amendment, an amendment is always treated as involving consideration and decision of the main question.
The Budget debate is unusual in that the Minister of Finance has a right to speak in reply to the debate for up to 10 minutes.
The Speaker therefore interrupts the debate 10 minutes before the 14 hours have expired and calls the Minister in reply. The Minister is not obliged to use this right.
Defeat of the main Appropriation Bill and therefore of the Budget would be a matter of extreme constitutional and political significance. It has even been suggested that the failure to pass an Appropriation Bill would cause all imprest supply authority to lapse unconditionally.
While this may not be the effect in law of the defeat of a Budget,
it does indicate how important such an event would be regarded. If an amendment expressly declaring no confidence in the Government is carried or the question for the second reading of the bill is defeated, a lack of confidence in the Government would have been demonstrated.
The main estimates
Estimates must be prepared for the main Appropriation Bill.
The estimates describe and support the appropriation proposals that the bill contains.
They identify the votes to which each appropriation relates, which Minister or Ministers are responsible for each vote, the department which administers it, and the type, amount, scope and (if a multi-year appropriation is involved) the period of the appropriation.
(A Minister responsible for a vote may be a different Minister from the Minister responsible for the department which is administering the vote.) The estimates may also set out a range of other information about the appropriations.
The information in the estimates helps to determine the extent of the activities that may be lawfully funded out of the appropriations that Parliament makes.
In the case of the Budget and the main Appropriation Bill, the estimates (Estimates of Appropriations for the Government of New Zealand), known as the main estimates, are laid before the House by the Minister immediately after the Budget statement has been delivered.
Along with the estimates the Minister must present further information supporting the main Appropriation Bill. This information gives additional information about the intended objectives of the appropriations, defines performance measures and forecast standards for each class of outputs and gives more comparative and forecast information about the proposed expenses and capital expenditure.
In its schedules the Appropriation Bill specifies the names and amounts of the individual appropriations. While multi-year appropriations are fully specified in the bill, the annual appropriations are not. Parliament makes these appropriations by reference to the output descriptions and other information (especially that relating to the scope of the appropriation) contained in the estimates and other supporting information. The Appropriation Bill is therefore not intelligible without reference to its associated documents, which is why presentation of estimates is an essential part of introducing an Appropriation Bill.
The appropriations for the offices of Parliament are included in the Appropriation Bill and in the estimates, according to the address commending them made by the House to the Governor-General. (See pp.474–5.)
Examination of the main estimates
The task of carrying out an examination of the main estimates in detail falls to the House’s select committees. An Appropriation Bill is not itself referred to a select committee, but the estimates are referred for scrutiny. The estimates stand referred to the Finance and Expenditure Committee immediately following the delivery of the Budget.
Allocation of votes
It is the task of the Finance and Expenditure Committee to examine a vote itself or to allocate it to one of the other subject committees for examination
– that is, to one of the 13 select committees with subject area jurisdictions.
In recognition of the fact that a vote may have more than one responsible Minister and that appropriations may be made for multi-class output expenses, the Finance and Expenditure Committee is empowered to divide a vote for the purposes of estimates examination. Thus it may decide to allocate some only of the appropriations contained in a vote to another committee for examination.
In determining what to allocate and which committees to make the allocations to, the Finance and Expenditure Committee is guided by its own workload, the significance of particular votes to the overall financial management of government and the subject areas of responsibility of the other committees. The committee is not obliged to consult with the other committees about the allocations it makes, though other committees have asked for an opportunity to comment when it is proposed to withhold from them a vote falling within their subject area.
The votes allocated include those relating to offices of Parliament which have been subject to pre-Budget approval by the Officers of Parliament Committee. In the 2005/06 financial year, the Finance and Expenditure Committee examined eight votes itself and allocated 61 votes to other committees for examination.
The Finance and Expenditure Committee resolves upon the allocations as soon as practicable after the Budget is delivered. It issues letters to all committees formally advising them of its decisions.
Standard estimates questionnaire
A preliminary action which the Finance and Expenditure Committee takes is to develop a standard estimates questionnaire which it forwards to vote Ministers as the initial step in the estimates examinations. Such a questionnaire was first developed in 1991 when the estimates examination was separated from review of financial performance. The committee receives advice on the form of the questionnaire from the Auditor-General.
The questionnaire focuses on the vote rather than departmental matters (which will be examined as part of financial review). It seeks information at a high level intended to supplement that contained in the estimates and supporting information presented with the Budget. It asks about critical issues affecting the vote and significant changes affecting appropriations contained in it, and for an elaboration of the mechanisms for evaluating the impact of outputs on outcomes. It may seek to identify matters which Ministers may be asked to elaborate on at the oral examination of the vote or provide pointers for the committee in targeting its examination. It is not designed to be burdensome.
Committees to which votes are allocated may always supplement the standard questionnaire with questions of their own devising, but they do tend to follow it as the basis for their examinations.
Ministers are sent the standard questionnaire in respect of each vote that they administer by the Finance and Expenditure Committee some six weeks before the Budget and are requested to respond to the committee immediately after the delivery of the Budget statement – that is, before the vote’s examination. These responses are distributed to the committees which are to examine the various votes. In addition to the questionnaire, other written questions on the estimates may be sent to the Minister or the department by the committee which is to examine the vote prior to the oral hearings on it. Such questions must be adopted by the committee in order to be transmitted for prior departmental response; individual members of the committee cannot send questions directly to the Minister or the department and make them part of the formal estimates process.
Other estimates documentation
An essential information document that is required for the estimates examination is a copy of the departmental output plan specifying the outputs to be supplied by the department and the standards that are to be used to measure departmental performance. Committees have protested where a copy of the purchase agreement has not been made available to them in time for the estimates examination.
If a committee considers that the output plan (formerly purchase agreement) is deficient in any way, it may recommend that other matters be included in it.
The statements of intent (which have absorbed department forecast reports) will also be considered by committees examining the estimates for any strategic commentary they contain, the adequacy of the performance measures specified and information relating to the department’s objectives and operations.
Officials and briefing
Officials from the office of the Auditor-General are available to assist committees with their examinations of the estimates. The Auditor-General consults with the Finance and Expenditure Committee each year to determine the general nature and extent of assistance to be provided on estimates examinations. Unless specific alternative arrangements are made, the assistance given to committees is as discussed with the Finance and Expenditure Committee and in accordance with the protocol in force for such assistance. The Auditor-General’s assistance to each committee can extend to help in determining questions for each examination, reviewing evidence and compiling the report.
Before the oral examination commences, the committee will receive a written briefing from the Auditor-General’s office on the vote it is to examine and may also have an oral briefing on that vote. These briefings will endeavour to draw the committee’s attention to any unusual or unexplained features in the appropriations for classes of outputs and other appropriations that the vote contains. Briefings constitute advice to the committee and are confidential to the committee until it reports, unless the committee decides to reveal their contents to the Minister or department concerned to assist with the examination. An official from the Auditor-General’s office may also be present during the committee’s examination to assist the committee with any technical issues that may arise.
Other officials may also be appointed to assist the committee. For example, the office of the Parliamentary Commissioner for the Environment may act as an adviser to committees in respect of votes dealing with conservation and the environment.
Oral hearings will be scheduled as soon as practicable after Budget day. They may even start while the Budget debate is in progress.
Estimates hearings are conducted in public like the hearing of evidence on any other matter. A committee may, by leave, decide to hear some of the evidence in private, for instance if commercially sensitive information is to be disclosed.
Formerly estimates examinations were almost exclusively directed to officials, with Ministers appearing only rarely. Now, to reflect the fact that appropriations are made to Ministers, the Minister responsible for the vote under examination is expected to attend and front the oral examination by the committee. However, the Minister will be accompanied by the chief executive of the department concerned and other officials who will also participate in the examination as required. Indeed, the fact that a chief executive did not appear even when the Minister did has drawn complaint from a committee.
One area that can cause difficulty is the question of responsibility for appropriations for classes of outputs to be supplied by other entities. Chief executives of departments are not responsible for the outputs or financial performance of a Crown entity or a State enterprise, even though these may be wholly or partly funded through a vote administered by the department.
In order that the estimates examination is not stymied where a vote contains payments to Crown entities for non-departmental outputs, representatives of the Crown entity concerned may be invited to participate in the examination. (As comparatively few outputs are purchased from State enterprises the issue rarely arises with them.)
As well as asking questions orally of the officials appearing before the committee, committee members may ask the officials to prepare further detailed information in writing on matters which arise from the questioning. Indeed, in some cases this may be the only practicable means by which a reply can be given. These written replies to matters raised at the examination are delivered to committee members within a reasonable time after the conclusion of the examination.
Given the time constraints on the estimates examination, allowing responses to be given later in writing as a condition of the committee processing the vote referred to it, is a convenient mode of proceeding for all concerned. It is then incumbent on departments to provide the follow-up responses to members in time for the Estimates debate in the House, though this is not obligatory.
Reports on votes
The Finance and Expenditure Committee and the other select committees examine the various votes to determine whether to recommend to the House that the appropriations contained in the vote be accepted.
The task of actually passing the estimates will fall to the committee of the whole House. At the conclusion of its examination of a vote, the select committee resolves whether to recommend the acceptance of the appropriations contained in the vote and draws up a report on it to the House. The committee may recommend that the House make changes to the appropriations made in the vote.
But the amounts contained in the estimates do not change as a direct result of select committee scrutiny.
Committees are required to report back to the House within two months of the delivery of the Budget.
(The House has extended this time where consideration of the estimates was disrupted by an early election.
) A committee has recommended that a vote be referred back to it where information that it had sought was not available by the time that it was obliged to report. The House subsequently referred the vote back to the committee for further examination.
A committee may report on a number of votes in the same report. These reports are expected to be concise, summarising the material provided in response to the written questionnaire and other significant written replies, and supplemented by material elicited during the oral examination.
A report on estimates is presented to the Clerk like any other select committee report.
Intelligence and security departments
Intelligence and security departments (the New Zealand Security Intelligence Service and the Government Communications Security Bureau) are in a special position in regard to their estimates. The statutory Intelligence and Security Committee may consider any matter in relation to an agency referred to it by the House.
Accordingly, votes relating to these departments are, by sessional resolutions of the House, examined by the Intelligence and Security Committee and are not subject to examination by a select committee.
The committee’s reports on its estimates examinations are presented to the House and dealt with as if they were select committee reports.
The Estimates debate
The committee stage of the Appropriation Bill, the stage at which the main estimates are passed, is known as the Estimates debate. The Estimates debate is the House’s consideration of the appropriations being sought by the Government in the votes set out in the main Appropriation Bill.
The committee of the whole House may consider each vote contained in the schedules to the bill along with the elaboration of the vote in the main estimates and supporting information. The Minister responsible for the vote sits at the Table on the chairperson’s right, and deals with questions which arise during the discussion. The Minister is assisted by officials who are seated in the Chamber on seats to the right of the Speaker’s chair. One of the factors which sets the Appropriation Bill apart from other Government bills is that there is more than one Minister who is answerable for its contents. The Minister of Finance is the Minister in charge of the bill, but as its provisions cover the whole gamut of government activity, the House requires every Minister to be potentially answerable to it for the spending to be undertaken within a vote for which that Minister has responsibility.
Eight hours are allocated to the Estimates debate.
Committee stage of the main Appropriation Bill
The order in which the committee of the whole House transacts its business when considering an Appropriation Bill is different from the order of business in committee on other bills. The committee stage is entirely devoted to the Estimates debate rather than to a consideration of the clauses and schedules of the bill. At the end of the total time permitted for the debate the provisions of the bill and any amendments will be put as one question without further debate.
The Government has the right to select any day except members’ Wednesdays for the Estimates debate. On such a day the Appropriation Bill is set down for consideration in committee.
The Government is also able to determine which votes are available for consideration each day and how long in total is to be spent on the Estimates debate each day. A note setting out this information must be printed on that day’s order paper.
Scheduling of the Estimates debate
Select committee examination and report by it of a vote is a prerequisite for that vote to be available for consideration during the Estimates debate.
As committees have two months from the Budget to make their reports on votes referred to them, the maximum time that a Government has to wait after the Budget before scheduling an Estimates debate is two months. Given the need to provide for eight hours of debate, the Estimates debate will occupy part of two or three sitting days. It has not been regarded as obligatory that written material called for by the select committee during its examination of a vote should have been delivered into the hands of members before the Estimates debate on that vote is held.
But where the committee has accepted a vote on the basis of an assurance that further material will be provided to members in time for the debate in the House, it is incumbent on Ministers and departments to ensure that such an assurance is observed. Estimates debates scheduled for votes have been postponed when it has been appreciated that written material asked for during the select committee examination has not been made available.
The Government’s determination of which votes are available for debate is also dependent on the availability of Ministers. As Ministers are often responsible for more than one vote, an attempt will be made to have all of a Minister’s votes available for debate on the same occasion. A vote can be scheduled for the Estimates debate while an acting Minister is in charge of the department.
The Speaker is responsible for votes relating to the Auditor-General, the Office of the Clerk of the House of Representatives, the Office of the Ombudsmen, the Parliamentary Commissioner for the Environment and the Parliamentary Service.
While the Government determines which votes are available each day and how long in total is to be spent on them, the Business Committee determines the order in which they are to be considered and how long will be spent on each vote.
In practice, the Business Committee leaves these matters to be agreed between the whips so that a detailed speaking list can be prepared dividing the overall time available between the parties and allowing any party to decide for itself the votes on which it wishes to make a contribution during the debate.
Consideration of the votes
As each vote is reached, the chairperson proposes the question “That Vote … stand part of the schedule”.
The Minister responsible for a vote under discussion must, if present in the Chamber, sit at the Table on the chairperson’s right.
But another Minister may act for the responsible Minister in the latter’s absence. However, as the scheduling of the debate is in the Government’s hands, it is expected that the responsible Minister will attend the debate as part of the House’s accountability process.
Where another Minister has responsibility for aspects of a vote, that other Minister may also participate in the Estimates debate from the Table. Members are entitled to make up to two five-minute speeches on each vote. The Minister responsible for the vote under discussion is not limited in the number of calls he or she may take. But the Minister is not normally allowed more than two consecutive calls (it is, in fact, entirely up to the chairperson whether the Minister is allowed even this number consecutively).
In practice, the whips’ agreement on speeches in the Estimates debate will determine how many contributions are made by members on each vote.
Until 1972 the debate on the estimates was subject to a most important restriction: reference to policy was not allowed. This restriction was not the subject of a Standing Order; it was a rule which had been developed by successive chairpersons (supported by Speakers) as part of their inherent power to rule on relevancy in debate. In 1972 the Standing Orders Committee recommended that references to policy should be permitted at all times on the estimates.
This recommendation was immediately adopted by the chairperson at the time, and the discussion of policy as it relates to the vote under consideration has since then been freely permitted.
The change from a debate which was directed principally to examining the administration and expenditure of each department to one in which government policy may be debated has, as the 1979 Standing Orders Committee remarked, “changed the whole character of the estimates debate from an examination of items of expenditure to a general discussion ranging from items of detail to broad policy”.
The 1985 Standing Orders Committee adopted the following statement of the scope of the debate:
The normal rules of debate apply to consideration of the estimates; the main principle is that debate should be relevant to the matter which is contained in the estimate currently under discussion. On a main estimate it is in order to discuss the general policy which lies behind the demand for that particular sum of money … The purpose … is not to permit discussions of general policy … but to focus attention on the need to grant, reduce or refuse to grant particular items of expenditure.
The Estimates debate is confined to the current spending plans as contained in the Budget papers and must relate to a matter for which an appropriation is contained in the estimates. It is no longer a vehicle for scrutinising and debating past performance (that is the purpose of the financial review debate).
The rule of relevancy, that debate must be confined to the items in the vote under discussion, can be difficult to apply in respect of departments with control functions which extend over other areas of government, in particular the Treasury and the office of the Auditor-General. All ministerial spending proposals that are made to Cabinet are reported on by the Treasury, and the Treasury’s functions in respect of the control of public expenditure and the formulation of economic policy can involve it intimately in the work of all other departments. This detailed involvement in another department may be discussed when the latter’s vote is being considered, but not on the vote relating to the Treasury. The Minister on this vote can be asked general questions, and there can be a general debate on policies with which the Treasury has been involved, but specific questioning on another department’s activities must be directed to the Minister for that department.
Similarly, issues relating to the policies and administration of a department must be raised when the vote relating to that department is being debated and not on the audit vote, even where reference to such matters is contained in an Auditor-General’s report.
Changes to the vote
During the Estimates debate on a vote any member may move to change a specified appropriation within the vote by a particular amount.
This is not an amendment to the question then before the committee; it is an independent motion moved during the course of the consideration of that question, though it is a proposed amendment to an appropriation contained within the vote and if it is carried it takes effect accordingly.
Traditionally, proposals to change a vote have taken the form of motions to reduce the vote as a means of expressing displeasure in the Minister or the department concerned. Token reductions of votes have been made from time to time.
The Government has itself agreed to or initiated the reduction of a vote.
Occasionally the select committee which has reported on the vote will recommend or indicate that it contemplated recommending a change in the vote.
Debate on a motion to change a vote supersedes the original question, as it does on a normal amendment. When the motion to change the vote has been disposed of, debate resumes on the original question. However, such a debate is part of the overall time allocated for debate on that vote.
While most proposals for changes to a vote take the form of a reduction, they can (since 1996) also take the form of an increase. Any proposal for a change is subject to the Crown’s financial veto. (See Chapter 31.) If the financial veto is exercised in respect of a proposal to change a vote, the proposed change may be debated but no question is put on it at the end of the debate and it is ruled out of order.
A motion to change a vote is out of order if it may have an impact on the Government’s fiscal aggregates and 24 hours’ notice of it has not been given before the House meets on the day it is to be moved. But if the select committee has recommended the proposed change, notice is not required.
A proposal to change a vote must specify the sum by which an appropriation contained in the vote is to be altered. Furthermore, as each output expense (or other type of appropriation) within a vote is a separate appropriation, a motion to change a vote must specify which output expense (or other type of appropriation) is to bear the reduction.
The debate is then confined to that appropriation.
When moving to change a vote, members often wish to give reasons for the proposal. Such reasons are not part of the motion and are not stated by the Chair or recorded in the journals,
but, provided they are relevant to the vote under discussion, may be added by the mover and can be debated. A member cannot open up a discussion on a matter outside the limits of the vote by adducing wide-ranging reasons for a change. The chairperson does not state the reasons advanced by a member moving a change to the vote, and does not usually comment on them, but if they could lead to discussion travelling outside the vote before the committee, the chairperson might require the member to restate them more narrowly. For this reason a general statement of no confidence in the Government would not be acceptable as a reason for a reduction in a vote, but a statement of no confidence in the Minister then at the Table would be.
If a change to a vote is made, the Minister of Finance will present to the House an addendum to the estimates to reflect this change. This is so that the estimates documents accord with the legal appropriations that are made by Parliament through the Appropriation Acts. As the estimates are an elaboration of those appropriations it is of critical importance that there be no suggestion that they differ from the appropriations actually made by Parliament.
Occasionally the Government itself will initiate changes to the votes and will prepare a supplementary order paper to amend the Appropriation Bill.
Where there are proposed amendments to the appropriations contained in the bill, these must be preceded by the tabling of further estimates adjusting the main estimates. In the case of proposals to adjust estimates relating to an office of Parliament, the proposal must first have been examined by the Officers of Parliament Committee and commended to the Governor-General by way of an address from the House.
Adjusting estimates may be examined by the Finance and Expenditure Committee. It is up to the committee as to whether it combines examinations of the main estimate with an adjusting estimate or reports separately on each. If it has already reported on the main estimate, a second, separate report on the adjusting estimate will be necessary.
Termination of the Estimates debate
At the conclusion of the eight hours allotted for consideration of the estimates, there are likely to be votes which have not yet been passed by the committee. The Standing Orders provide that in this case any remaining votes, together with the provisions of the bill and any amendments to the bill proposed by the Minister on a supplementary order paper, are to be proposed by the chairperson as one question and this question is to be decided immediately without amendment or debate.
There is no provision for dealing with amendments from other members that have not been proposed within the eight hours allowed for the debate.
Passing of the main Appropriation Bill
The third reading of the main Appropriation Bill granting comprehensive annual appropriations must be completed within three months of the delivery of the Budget.
(This time limit has been extended where an early election dislocated examination of the estimates by committees.
) Effectively, given that the Budget must have been delivered by 31 July, this means the bill will be passed at the latest by 31 October, four months into the financial year. In practice, it has tended to be passed much sooner than this. This is a major improvement on the situation that obtained up to the 1990/91 financial year when, in the absence of a Standing Orders requirement, the main Appropriation Bill tended not to be passed until shortly before the end of the financial year to which it related.
The normal rules of relevancy apply to the third reading debate. It is solely a spending bill, not a taxing bill, and a detailed discussion of economic policy is not permitted at this stage.
In addition, the debate may include reference to the content of the fiscal strategy report and the economic and fiscal update (presented at the time of the Budget) and the Finance and Expenditure Committee’s report on those documents.
The question for the third reading is open to amendment but not in respect of an amendment that would postpone the third reading beyond three months of the Budget, as required by the Standing Orders. The debate may not exceed three hours and members are able to speak for up to 10 minutes each.
The debate may be taken together with the second reading of an Imprest Supply Bill
and it is the invariable practice to do this.
Second and subsequent Imprest Supply Bills
When the main Appropriation Bill has been passed, the appropriation authority conferred by the first Imprest Supply Act lapses. The Government now has its principal, detailed appropriations as set out in the main Appropriation Act and the estimates. However, there will still be at least eight months of the financial year to run. Supplementary estimates adding to and adjusting the appropriations that have already been made will be presented later in the financial year. But, in order to give the Government a general authority to deal with spending issues relating to the current year that may have arisen since the main estimates were prepared and that will possibly arise before the presentation of the supplementary estimates, a second Imprest Supply Act is enacted immediately after the main Appropriation Act.
This second tranche of imprest supply is passed in tandem with the third reading of the Appropriation Bill. For this purpose the debate on its second reading may be taken together with the third reading of that bill.
The rules for the introduction and passing of the second Imprest Supply Bill are identical with those for the first bill. (See pp.476–7.) This second imprest supply authority lapses when the House enacts the Appropriation Act incorporating the supplementary estimates.
Normally there are two grants of imprest supply each financial year: the first given before the financial year opens, which lapses with the passing of the main Appropriation Act, and the second given in association with that Act and lapsing with the supplementary estimates. But if there is an unexpected need for further spending authority arising ahead of the supplementary estimates, a third Imprest Supply Bill will be necessary.
The rules for the introduction and passing of such a bill and the time limits for debating it are identical with those for other Imprest Supply bills, but as there is no Appropriation Bill with which it can be linked for the purposes of debate, it is debated as a stand-alone piece of legislation.
The main Appropriation Act, appropriating the amounts set out in the main estimates, is the Government’s chief financial authority for the year. However, the main estimates are presented to the House before or shortly after the start of the financial year and are passed within four months of it opening. During and after this time it may become apparent to the Government that the sums it has requested to be voted to it in the main estimates need to be altered. It is now generally expected that there will be a need for supplementary appropriations to be made by the end of the financial year. Indeed, this may be contemplated in the main estimates themselves.
Normally supplementary estimates make only technical accounting adjustments without any significant overall fiscal impact, but where the Government changes between the delivery of the Budget and the presentation of supplementary estimates, the expenditure initiatives authorised by the supplementary estimates can be very significant.
In considering supplementary estimates, select committees expect to have drawn to their attention changes in governmental priorities from the main estimates as opposed to merely technical adjustments.
Supplementary appropriations are made by way of an Appropriation Bill introduced on the same day that supplementary estimates are presented to the House.
Supplementary estimates must be prepared for each Appropriation Bill that seeks supplementary appropriations. They set out how the amounts proposed to be appropriated are to be charged to each vote. Supplementary estimates are required to contain much of the information required for the main estimates except where this would be superfluous, in which case the supplementary estimates merely record any changes from the estimates previously presented.
The Auditor-General has in the past criticised some of the information given with the supplementary estimates as not clearly and understandably describing the purpose and reasons for the changes proposed to the main estimates.
Just as the main estimates are an elaboration of the main Appropriation Bill, the supplementary estimates are an elaboration of the Appropriation Bill to which they relate.
Introduction of Appropriation Bill
Supplementary estimates are presented to the House on the day that an Appropriation Bill containing supplementary estimates is to be introduced. The bill may be introduced at any time as long as this does not interrupt a debate.
Alternatively, it may be introduced in the same way as any other bill. Although not invariable, the practice has been to introduce the supplementary appropriation bill on the same day as the Budget for the next financial year (that is, in May or June). There is no debate on the first reading of the bill.
Examination of supplementary estimates
No Appropriation Bill is referred to a select committee,
but any supplementary estimates relating to the bill do stand referred to the Finance and Expenditure Committee after the bill’s introduction.
That committee can examine a vote contained in the supplementary estimates itself or refer it to any other subject select committee for examination.
It cannot divide a vote for examination in the supplementary estimates as it can on examination of the main estimates.
Although there is no report time prescribed, in practice the supplementary estimates examination is even more time-confined than the estimates examination because the bill has to be passed by the end of the financial year on 30 June. For this reason the Finance and Expenditure Committee does not always use its power to refer supplementary estimates to other committees. Often it carries out the examination itself, relying on Treasury officials to explain the supplementary appropriations but requiring the appearance before the committee of officials from other departments where necessary.
Any committee involved in examining supplementary estimates resolves whether to recommend to the House the appropriations contained in the vote before it. Committees may also recommend changes to the votes.
Further supplementary estimates
Just as the main Appropriation Bill may be amended by the presentation of adjusting estimates, an Appropriation Bill containing supplementary appropriations may be amended by the presentation of further supplementary estimates. (The amendments to the bill itself are set out on a supplementary order paper in the name of the Minister.) There can indeed be a succession of further supplementary estimates presented.
Further supplementary estimates stand referred to the Finance and Expenditure Committee. They could be referred by that committee to another committee but, in practice, are likely to be dealt with by it. (An alternative to amending the Appropriation Bill is to introduce another Appropriation Bill and present supplementary estimates in respect of it.)
Supplementary estimates debate
An Appropriation Bill containing supplementary estimates remains on the order paper until the supplementary estimates and any further supplementary estimates which relate to it have been reported to the House. When these have been reported to the House the supplementary estimates debate can be held.
The debate on the supplementary estimates in the House occurs on the second reading of the bill. Three hours are allowed for this debate with each member able to speak for up to 10 minutes.
The debate must be relevant to the bill’s provisions and deal with the appropriations that the Government wishes to supplement or vary; it is not another Budget debate. As it is the winding-up debate of the financial year, it may cover an overview of the policies for which the Government has sought appropriations in the financial year and of the Government’s financial position at the end of the year.
There can be no “public affairs” amendment moved on the second reading of this bill. But the second reading of an Appropriation Bill containing the supplementary estimates may be taken together with an Imprest Supply Bill.
It is indeed the invariable practice to combine this debate with the debate on the first Imprest Supply Bill for the following year which is likely to be ready for introduction at this time. A public affairs amendment can be moved on the second reading of an Imprest Supply Bill.
Passing of Appropriation Bill
After the second reading of the bill the House proceeds immediately to its third reading unless the Minister wishes to propose amendments to the bill or a select committee has recommended a change to a vote and that change has not itself been the subject of a financial veto.
In either case a committee stage is held, where only the Minister’s amendments (and any relevant amendments to them) or the amendment to the appropriation recommended by the committee, as the case may be, are considered. When amendments to a part or schedule have been disposed of, the question is put that that part or schedule as amended stand part.
There is no debate on the third reading or opportunity to move any amendment to the question.
Confirmation or validation of expenses and capital expenditure
Permanent legislative authority and the Appropriation Acts passed before the end of the financial year to which they relate, together with any transfers of appropriations made by Order in Council,
constitute the final appropriations and authorisations relating to that year. But some of those appropriations or authorisations contemplate that they are in part provisional in that they must be reported to the House and steps taken to seek parliamentary confirmation of them.
Emergency expenses or capital expenditure incurred under a state of emergency or civil defence emergency must be included in an Appropriation Bill for confirmation by Parliament.
Expenses or capital expenditure approved by the Minister of Finance in excess of existing appropriations must be included in an Appropriation Bill for the next financial year, for confirmation by Parliament.
In the case of Orders in Council transferring appropriations within a vote, a clause confirming the transfers must be included in an Appropriation Bill for the next financial year.
(See Chapter 32.) In no case is parliamentary validation of such expenses or capital expenditure involved required since the statute under which it is incurred provides legal authority for it. Thus the provision requiring the Government to seek confirmation of expenditure acknowledges that this does not affect the validity of the expenditure, of any Order in Council, or of any transfer.
But the requirement at least to seek subsequent parliamentary confirmation ensures that the House is appraised of the spending authority used by the Government under these provisions.
It is possible that expenses or capital expenditure may have been incurred without any appropriation or legal authority at all. In such a case unlawful expenditure has been incurred and, if the illegality is to be cured, parliamentary validation must be sought. (See Chapter 32.)
For all of these matters an Appropriation (Financial Review) Bill may be used as the legislative vehicle. An Appropriation (Financial Review) Bill is concerned solely with sanctioning, confirming or validating expenditure incurred in the previous financial year.
(The procedures for considering an Appropriation (Financial Review) Bill are described in Chapter 36.) From time to time unlawful expenditure may also be validated by a Finance Bill
or other legislation.